Judge throws out antitrust case against Supervalu

Article by: MIKE HUGHLETT

Star Tribune

January 15, 2013 - 10:33 PM

A federal judge in Minneapolis has tossed out an antitrust lawsuit against Supervalu and C&S Wholesale Grocers, ruling that a 2003 deal between the nation's two largest grocery wholesalers didn't restrain competition.

Two supermarkets, one each in Iowa and Massachusetts, sued the wholesalers in 2009, claiming the companies divvied up regions so they wouldn't have to compete with each other.

U.S. District Judge Ann Montgomery on Friday ruled in favor of Eden Prairie-based Supervalu and Keene, N.H.-based C&S. The retailers who sued the wholesalers failed to present evidence of "unreasonable restraint of trade," she wrote in a summary judgment ruling.

In a statement, Supervalu said the decision "confirmed" that the deal with C&S "was a legitimate business transaction that made both wholesalers more efficient and better equipped to service independent retailers."

Richard Drubel, an attorney for plaintiffs D&G Inc. in Mount Vernon, Iowa, and DeLuca's Market in Boston, said "we certainly intend to appeal." He declined to comment further.

In July, Montgomery rejected class-action status for the suit, saying the plaintiffs had failed to make a case that the Supervalu/C&S deal injured an entire class of plaintiffs.

Roots in Fleming case

The suit stems from the unwinding of Fleming Cos., which filed bankruptcy in 2003. C&S bought Fleming's substantial grocery wholesaling business, including three distribution facilities in the Midwest.

Shortly thereafter, C&S transferred Fleming's former Midwest operations, including three distribution centers, to Supervalu. In return, Supervalu transferred to C&S its New England operations, including three operating warehouses.

At the time of that transaction, Supervalu had been competing with C&S in New England, though C&S had not been competing in the Midwest with Supervalu. The wholesalers' agreement included certain "non-compete" provisions.

D&G and DeLuca claim the deal was aimed at eliminating competition in the Midwest and New England, driving up prices for retailers.

But they didn't present evidence that Supervalu and C&S had the market power to raise prices beyond a competitive level, Montgomery wrote. Plus, wholesale alternatives to both companies continued to exist, including Edina-based Nash Finch in the Midwest, she wrote.